Coronavirus response, Internal EU politics, Latest news

Revised EU industrial strategy : fourteen sectors slated to reduce ‘strategic dependencies’

Alongside long-announced new legislation aimed at countering the distortive effects of subsidies of non-EU firms operating in the European Single Market, the Commission is set to unveil a revised industrial strategy in the coming days.

The initiative, driven by Thierry Breton, the commissioner in charge of the EU’s single market, is about updating a strategy that was unveiled in March 2020, only a few days before the full scale of the COVID-19 pandemic hit Europe.

Whereas in March 2020 the aim was mainly to ensure investments are green and enable a digital transition, the new paper now wants to ensure the new industrial strategy serves the purposes of the EU’s “open strategic autonomy”, reduces “strategic dependencies” on supplies of specific raw materials or industrial inputs and increases European production “capabilities” in critical sectors.

The paper, seen by Borderlex, identifies fourteen industrial ecosystems that would require some form of tailored support from the Commission. It also identifies a set of countries on which it finds itself too ‘strategically dependent’ for specific inputs.

The EU’s ‘ecosystems’ approach to having an industrial policy already spelt out in 2020 seeks to work with the full value chain – from SME start-ups to large conglomerates – which operate in the same industrial sector. The new paper announces that there could be specific EU capital funding for SMEs in future.

Too “strategically dependent” on China, Vietnam and Brazil

The Commission has now gathered a lot of data on its ‘dependencies’ that is set to be unveiled as well in the coming days. The EU’s executive arm  has identified fourteen sectors where the EU wants to be able to intervene as part of an industrial strategy that aims to ensure more is produced in Europe.

“Out of 5,200 products imported into the EU, the analysis identifies 137 products (representing 6% of the EU’s total import value of goods) in sensitive ecosystems for which the EU is highly dependent – mainly in the energy intensive industries (such as raw materials) and health ecosystems (such as active pharmaceutical ingredients) as well as concerning other products relevant to support the green and digital transformation,” reads the draft paper seen by Borderlex.

Within those 137 products, “about half of imports … originate in China, followed by Vietnam and Brazil”, writes the Commission.

The EU’s import diversification strategy would be matched by more detailed monitoring and controlling of imports of said materials at member state borders.

The fourteen ‘ecosystems’ identified by the Commission are agri-food, aerospace and defence, construction, cultural and creative industries, digital, electronics, energy-intensive industries, renewable energy, health, mobility (transport and automotive), “proximity, social economy”, retail, textiles and tourism.

International partnerships

The new strategy would also involve developing international partnerships.

“While the EU faces certain dependencies, other countries also depend on the EU (“reverse dependencies”),” writes the Commission. “The EU also shares foreign dependencies with our partners (“common dependencies”).”

As part of this recognition, the Commission pledges to “pool resources and build stronger and more diverse alternative supply chains with our closest allies and partners”. Among those alliances the EU cites “the transatlantic relationship” and “the enlargement and neighbourhood policy”.

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